Glossary · UK
What is First Year Allowance (FYA)?
A capital allowance that lets a business deduct the full cost of certain qualifying assets in the year they are bought.
Full Definition
A first year allowance lets a business deduct the whole cost of certain qualifying assets from its taxable profits in the year the money is spent, rather than spreading relief over several years through writing down allowances. First year allowances are targeted at specific types of expenditure that the government wants to encourage, and they do not count towards the Annual Investment Allowance limit, so they can be claimed on top of it. For 2026/27, qualifying items include new and unused zero-emission cars and electric vehicle charging point equipment, which attract a 100% first year allowance. Companies may also benefit from full expensing, which gives a 100% deduction on most new and unused main rate plant and machinery, and a 50% first year allowance on new special rate assets. If an asset on which a first year allowance was claimed is later sold, a balancing charge may add some of the relief back to profits. Used or second-hand assets generally do not qualify for first year allowances and fall into the normal pools instead.